Sunday, November 15, 2015

This is an interesting article on Zerohedge which argues that the can-kickers of the US financial elite, which has been observably taking place since 1987, are finding it harder and harder to kick an increasingly heavy can:

Since policy is not a zero-sum game, i.e., one participant’s loss does not necessarily entail a gain for another, this paradox has a logical explanation. A crisis erupts within any system when there is a discrepancy between its internal structure and the sum total of available resources (that is, those resources will eventually prove inadequate for the system to function normally and in the usual way).

There are at least three basic options for addressing this situation:

Through reform, in which the system’s internal structure evolves in such a way as to better correspond to the available resources.

Through the system’s collapse, in which the same result is achieved via revolution.

Through preservation, in which the inputs threatening the system are eliminated by force, and the relationships within the system are carefully preserved on an inequitable relationship basis (whether between classes, social strata, castes, or nations).

The preservation method was attempted by the Ming and Qing dynasties in China, as well as the Tokugawa Shogunate in Japan. It was utilized successfully (in the 19th century) prior to the era of capitalist globalization. But neither of those Eastern civilizations (although fairly robust internally) survived their collision with the technologically more advanced (and hence more militarily and politically powerful) European civilization. Japan found its answer on the path of modernization (reform) back in the second half of the 19th century, China spent a century immersed in the quagmire of semi-colonial dependence and bloody civil wars, until the new leadership of Deng Xiaoping was able to articulate its own vision of modernizing reforms.

This point leads us to the conclusion that a system can be preserved only if it is safeguarded from any unwanted external influences, i.e., if it controls the globalized world.

The contradiction between the concept of escaping the crisis, which has been adopted the US elite, and the alternative concept – proposed by Russia and backed by China, then by the BRICS nations and now a large part of the world – lay in the fact that the politicians in Washington were working from the premise that they are able to fully control the globalized world and guide its development in the direction they wish. Therefore, faced with dwindling resources to sustain the mechanisms that perpetuate their global hegemony, they tried to resolve the problem by forcefully suppressing potential opponents in order to reallocate global resources in their favor.

Having already finance-raped the US middle class, they simply can't find enough external wealth to keep the pyramid scheme going. Hence the finance-rape of Ukraine and the failed finance-rapes of Syria and Iran. If the author is correct, about the only places left for them to find any remaining wealth are Saudi Arabia, Japan, and Singapore. Russia has already been looted, China is off-limits, and the EU is as tapped-out as the USA.

Up until 2015, America’s elite (or at least the ones who determine US policy) had been assured that they possessed sufficient financial, economic, military, and political strength to cripple the rest of the world, while still preserving Washington’s hegemony by depriving everyone, including (at the final stage) even the American people of any real political sovereignty or economic rights. European bureaucrats were important allies for that elite – i.e., the cosmopolitan, comprador-bourgeoisie sector of the EU elite, whose welfare hinged on the further integration of transatlantic (i.e., under US control) EU entities (in which the premise of Atlantic solidarity has become geopolitical dogma) and NATO, although this is in conflict with the interests of the EU member states.

However, the crisis in Ukraine, which has dragged on much longer than originally planned, Russia’s impressive surge of military and political energy as it moved to resolve the Syrian crisis (something for which the US did not have an appropriate response) and, most important, the progressive creation of alternative financial and economic entities that call into question the dollar’s position as the de facto world currency, have forced a sector of America’s elite that is amenable to compromise to rouse itself (over the last 15 years that elite has been effectively excluded from participation in any strategic decisions).

Already the European peoples are starting to develop more trust and confidence in Russia than in the USA. The new nationalist governments will not be friendly to the USA due to the way in which the US government is at least partially responsible for the migrant invasion. It is the coming break between the 70-year unequal alliance between the USA and Western Europe that will end the Pax Americana, although in light of how many countries have been invaded by American troops in the interim, Rex Americana would probably be a more accurate term.

41 Comments:

This post is important for showing the importance of wealth as the lever for pivotal world events, like wars. It's possible to get to graduate level study of history and not pick up on that connection.

It's as if these so-called elites never heard the tale of the goose who laid the golden eggs. They and the left have been living off the stored capital of wealth and cultural stability built up over the prior 100 years or so, thinking that it would never run out. Of course their insane schemes will eventually deplete such resources, and then the whole structure will come crashing down. But it is a credit to the older society which built up the enormous stored capital that the current elite's avoidance-of-reality narratives have been able to last for so long.

None of their machinations have been by accident. Such entities as the CFR and bilderberg group have no doubt spent enormous sums on psychological and sociological studies to show them the best ways to control the populace. Then those struldbrugs have undoubtedly used their vast wealth to dictate terms and control the next layer of elitists below them, i.e., the ones that we the public are actually aware of. However, unbenownst to the struldbrugs, the trouble with such studies is raging confirmation bias, in that they unwittingly decided on their desired historical and control narratives before they even commissioned the studies.

The alternate money system from the BRICS is what concerns me the most. I'm beginning to pursue secondary income streams in the hopes I can save extended family when hyper-inflation roles in. Hopefully I'll just be a rich guy and this will be a none issue. Sadly, hope is not an effective strategy.

Sean, I have been thinking this a lot lately. When I think about it I find it almost hard to believe that as a kid I saw the Berlin Wall come down thought the Godless Commies have gone down. Now a few decades later, I am living in the land of the Godless Commies looking at Russia defending Christianity. It is all very surreal.

China has a couple trillion that can be poached. Engineer a conflict and cancel her treasuries. The yuan could be destroyed and China sent into a depression without much effort right now. The economy there is a Ponzi worse than America's. The Fed may be able to do it single handed.

Do you really think there is that much wealth left in Japan to thieve away?

Yes, personal savings are still relatively high, but almost all of the people who've built savings are aging near to retirement or well beyond. They're holding onto their wealth, and eventually their children will inherit whatever is left of it. But those children (people in their 20s, 30s, and 40s) aren't finding it so easy to save money. Taxes are higher. Salaries aren't. It's much more difficult to build a new business in Japan than it was a generation ago. Domestic demand for most goods and services (outside of elderly care) is weak. What wealth is accumulated is steadily shrinking, and there isn't much new wealth creation.

Meanwhile, the government's debt load essentially cancels out most of what the Japanese people personally have saved. In effect, the money has already been robbed. The government's IOU is based on its ability to draw from private savings to pay back the debt. So far, the Japanese government is just letting the people live under the illusion that the money is still theirs.

Still plenty of cash in 401K's to grab. Just a little haircut. Everyone knows only rich people have retirement accounts anyway.

It was always a fairly ingenious scheme. Convince people to lock their money into the stock market to artificially boost Wall Street prices. Place major penalties and taxes so no one gets the itch to pull the money out. Now it's just sitting there waiting for some Democrat to argue it's needed to transfer to the minority of the week.

Yes. China will disintegrate into warring states within a decade, twenty years at the most. It's happened so many times in the past that the Chinese basically expect it. It's all part of the normal (and eternal) cycle of Chinese history.

The winner (to the extent there is a winner) will be any foreign power that manages to grab the Shenzhen/HK region, run it as a colony, and defend it from the starving mobs attacking from outside.

I wonder what Japan has done with all the money--they don't even allow foreigners to settle in the country, let alone give them welfare...and they don't have a big military.

4th largest navy in the world, and they're building up now to counter the threat from the PRC. But I think it was mostly spent on things like propping up zombie banks and construction projects, plus of course general governmental deficit spending.

Now [401K money is] just sitting there waiting for some Democrat to argue it's needed to transfer to the minority of the week.

Yes. China will disintegrate into warring states within a decade, twenty years at the most. It's happened so many times in the past that the Chinese basically expect it. It's all part of the normal (and eternal) cycle of Chinese history.

It is amusing when people who know nothing about China or Chinese people make this claim.

China is only about 50 years into this cycle after a lengthy interregnum.

@13 you were doing that when you got a pension plan from your company, you just didn't see it happen.

As for giving a 401k a haircut, they would have to be very careful about it. The 401k isn't just a pile of money, it is a contract with the government. It can't just grab cash without running into the takings clause buzzsaw.

That is why most people believe it will take the form of forcing a % of the 401k to be invested in treasuries. You know for the safety of the individual's plan, but really as a means to manufacture demand for treasuries to suppress interest rates.

---

This doesn't seem likely to come to pass in the next decade. With energy supplies being sky high it puts a lot of pressure on countries like Russia. I just don't see a dollar alternative coming along anytime soon.

There were six years from the crash of 2001 to that of 2007. So in 2015 we might be overdue for another. Has anything really changed for the better since 2007? It feels like we've been treading water in the open ocean for a long time now.

With the world turning against the US, is it reasonable to expect foreign powers to invade and carve up the former US after the fed gov stops paying the bar tab? I'm sure Russia would like Alaska back. I expect Mexico would like a piece of the action too but the example of China's decent into neo-colonial dependence is disturbing.

"'It is amusing when people who know nothing about China or Chinese people make this claim."

The history of China includes numerous dynasties and eras that lasted for less than 100 years. Most recently, the Mao era only lasted between 1949 and 1976. The Deng era lasted from 1978 to 1992. Since then the country has been running on fumes and bureaucratic inertia. The periods of Chinese history when the state has been run by a gigantic bureaucracy haven't ended well, as a rule.

@22 That is daft. You cannot invade a country that has 350 million small arms dispersed amongst its population. Now some sort of virus that wipes us out and preserves the infrastructure....

---

Has China ever had such a large surplus of breeding age males, with such an idiotic self imposed demographics tree? It seems to me that something is going to need to happen to set that right in the relatively near future.

I'm pretty sure a requirement for the fall of the dollar is something else people believe in to take its place. The worse the US government bungles things, the lower the bar, but it's still a bar and something has to clear it. BRICS or gold or .22LR cartridges...

As for giving a 401k a haircut, they would have to be very careful about it. The 401k isn't just a pile of money, it is a contract with the government. It can't just grab cash without running into the takings clause buzzsaw.

Buzzsaw? The takings clause barely qualifies as a dremel tool. It our current would-be elite aren't levered out of power before they run out of other things to steal, they'll steal 401(k)s without any hesitation.

...China...

I'm on-board with a China collapse sooner rather than later. They're reliant upon exports for their recent prosperity. Exports rely on open sea lanes. The US isn't going to be in that business much longer and I don't think China can fill the role.

@10 Japan has a huge military, one of the largest in the world measured by spending. They choose to call it a "self-defense force" instead of a "military," but they still get all the best toys that money can buy.

But to understand where Japan spends the money, you have to understand a bit about how Japanese society works. The society is a patronage system, one in which nobody is left out and nobody is allowed to fail. For this to work, Japanese people have to hew tightly to common social norms, which allows for strong levels of trust. Nobody is going to run away and leave others twisting in the wind. Everybody is going to be taken care of.

As such, if there are 500 construction companies needing public works projects to keep them afloat, the number of public works projects needed by the country isn't defined by how many roads and buildings the public needs, but by the number of construction companies needing contracts. Everybody gets some scraps to keep them alive. The result is a lot of barely used community centers and a country that is virtually covered over in concrete everywhere you look, but it's kept businesses going and kept people employed in decent-paying jobs, which, until Japan's malaise, made everybody good consumers.

The entire economy relies on this practice. The schools and city halls in small towns transfer staff around all the time, necessitating lots of welcome and goodbye parties. Conveniently, this means that these offices can frequent every banquet restaurant and karaoke bar in town at least once a year. Purchasing for government offices, businesses, and projects is regularly divided up so that various suppliers all get a piece. School jerseys and uniforms that kids have to wear are commonly sold at only one or two specific clothing stores in town, but each such shop gets only one or two of the local schools, such that every shop unofficially gets semi-exclusive rights to sell overpriced, highly profitable, required school clothing. In Japan, everybody ends up spending more for everything so that everybody can make sure everybody else is taken care of.

That's where Japan's government has thrown away its money, down this bottomless hole of back-scratching. For awhile, this system worked, but eventually debt loads publicly and privately grew too large. Making sure everybody was cared for always meant spending more money than was available. And so now the system doesn't work so well anymore.

@28: When the Japanese government casually lost the pension records of 50 million citizens, from previous readings of mine, those in the second and lower tiers of society, I didn't get the impression it was taking care of everybody. What I know of Japanese history tells me that their rulers haven't really cared much about "the people" for centuries, since before the Tokugawa Shogunate. And I think that might be part of why their birth rate started dropping in 1974 and never recovered.

In The Multiplex Man, James P Hogan describes a future where the Western World (American and more) essentially become totalitarian governments under a guise of enviromentalism, while Russia becomes the bastion of openness and freedom. I love that book:

How to make China both poor and crazy. Institute a 100% tariff on all Chinese imports, and provide 20 nuclear cruise missiles each to Viet Nam, Japan, S.Korea, Philippines, and Thailand. Missiles pre-programmed only for China.

I personally would like the USA to equip my family with a Winnebago and two ICBMs, and by the way don't piss me off.

It really jumps out to the unbiased and the Christian that Putin WILL protect Russia, the Russian people, and the Russian Church. I was hoping that my escape to country would be in the Caribbean, but I guess I could get use to wearing more clothing.

@19 WillBeast: " The 401k isn't just a pile of money, it is a contract with the government. It can't just grab cash without running into the takings clause buzzsaw."

Looks like someone forgot about Kelo... I mean if the government can justify takings based on ̶i̶m̶a̶g̶i̶n̶e̶d̶ projected tax revenue increases, why can't they just 'project' some benefit to taking a 401k?

Even worse is that the American leftists are the Soviet Union's useful idiots.

They used to be the Soviet Union's useful idiots. And they probably still think they are! But in reality they're now the useful idiots for the neocons and global elites. The one thing that hasn't changed is that they're still idiots.

Of course mainstream conservatives (the cuckservatives if you like) are idiots as well. It's a choice between two lots of idiots.

@MatamorosFrench police arrest five Russians suspected of planning an attack

It's no surprise that the elites are trying to spin the terror attack into anti-Russian hysteria. Russophobia has been a reliable standby since 1854. Here in Australia we still have fortifications that were built during the Crimean War when we were expecting the Russian hordes to come sailing into Sydney Harbour to invade us.

Russia has a new torpedo. Nuclear tipped. Megatonnage: Classified. Range: 10,000 km. Depth 1000 meters. Five subs, one in Gulf, two in mid-atlanic, two in mid-pacific would destroy every major port city. Bye to Corpus Christi, Galveston, Houston, Port Arthur, N.O., Pasagoula, Pensacola, Ft .Walton, Tampa, Miami, Canaveral, Jacksonville, Savannah, and Charleston. From Groton and Boston to Virginia Beach on the Atlanic and from Long Beach to Puget Sound and Pearl in the Pacific - all gone and within seconds. Who does the U.S. counter attack? Russia, China, Cuban engineers building a runway in Grenada? The Wild Card, does any remaining Christian soldier follow his trans gendered lesbian officer and attack his Russian brothers in Christ? Remember, we have already declared economic warfare on Russia for reclaiming Russian soil and Russian citizens in Crimea.